Amit Gupta, Delhi V. DCIT, Central Circle-14, New Delhi

ITA 9308/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0951 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 02-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80C; 10(10D); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘A’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.9308/Del./2019 (ASSESSMENT YEAR : 2017-18) Amit Gupta, vs. DCIT, CPC, C/o Raj Kumar & Associates, Bengaluru. Chartered Accountants, L-7A (LGF), South Extension Part – II, New Delhi – 110 049. (PAN : AAPPG1558C) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rajkumar, CA Shri Suraj Gupta, Advocate REVENUE BY : Shri Jitendra Chand, Senior DR Date of Hearing : 04.10.2022 Date of Order : 13.10.2022 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-XXVI, New Delhi dated 28.10.2019 for the Assessment Year 2017-18. 2. The grounds of appeal raised by the assessee read as under :- “1. That under the fact & circumstance, Ld. A.O. at CPC grossly erred in law as well as on merits in making addition / adjustment of Rs.59,15,161/- on the ground of difference between the returned income and income as per 26AS, on ITA No.9308/Del./2019 2 which ground no adjustment could had been made u/s.143(l) as there existed a reasonable cause for such difference being Rs.59,15,161/-, claimed by assessee as exempted income u/s. 10(10D) being receipt on maturity of insurance policy with LIC of India. 1.1 That the addition made by the CPC is outside the scope of asstt. u/s.143(1) as the same is claimed as exempted u/s.10(10D) and the Ld. A.O. CPC erred in law in making the said addition without considering and adjudicating the objection raised by the assessee against the said adjustment at the stage when the said adjustment was proposed by CPC. 2. That, without prejudice, under the facts and circumstances the claim of exemption u/s.10(10D) for Rs.59,15,161/- is fully eligible even on merits, hence the Ld. CIT(A) erred in law and on merits in giving relief only for Rs.12,48,585/- the amount of the premium of the policy paid by the assessee himself thus erred in sustaining the addition to the extent of Rs.46,66,576/- (59,15,161 - 12,48,585).” 3. Brief facts of the case are that in this case, the assessee is an individual. He received RS.59,37,500/- from LIC under Keyman insurance policy. It was claimed exempted u/s 10(10D). However, in the processing u/s 143(1) of the Income-tax Act, 1961 (for short 'the Act') the same stood added by CPC. 4. Before the ld. CIT (A), assessee explained that CPC was explained that Rs.59,37,500/- was received from LIC (Keyman insurance policy) which was exempted u/s 10(10D). However, CPCP added Rs.59,37,500/- being receipt from LIC. Further assessee made following submissions before the ld. CIT (A) “In this regard, after giving expl. the CPC was either required to accept the claim, in the alternative, the matter was to be referred ITA No.9308/Del./2019 3 to AO for examination on merits after hearing the assessee. Second proviso to section 143(1) provides for ere to consider the reply, which has not been considered by CPC, which makes the intimation illegal. Further, in the absence of not doing so, the action of CPC is illegal and addition needs to be quashed. Attached.- • Computation of income (3) • Communication letter from CPC informing difference (4) • Reply of assessee to CPC (5) • Intimation U/sI43(1) (6-9) C. Even on merits addition is wrong One - Sec. 10(100) (b) provides that any sum received under Keyman insurance policy shall not be exempted U/s 10(100). However, Explanation to this section provides the definition of "Keyman insurance policy". It provides that it includes the policies which have been assigned to a person, at any time during the term of policy with or without any consideration. However, this condition has been inserted w.e.f 1-4-2014 i.e. AY 14-15. Now in this case, the insurance policy was taken by Suruchi foods (P) ltd. in the name of director(assessee) Amit gupta. The payment of premiums upto 2005 i.e 05 No's. of premium have been given by Suruchi foods (P) ltd. Thereafter, the policy was assigned in the year 2006 to Amit gupta and thereafter all balance payment have been given only by amit gupta. The assignment thus, in this case has been done in the year 2006 which is much prior to AY 14-15. It is submitted that since the said clause of assignment stood inserted w.e.f A Y 14- 15, therefore the policies where assignment has been done prior to AY 14-15, such keyman insurance policies are not taxable. The Expl. 1, for the purpose or assignment has to applied only prospectively and not retrospectively. Thus in view of said Expl. this Keyman insurance policy is exempted U/s 10(10D) attached:- • Copy of policy bond (10) • Details of payment (11) • Bank statements of suruchi foods (P) ltd. (12-16) • Bank statements of assessee (17-20) ITA No.9308/Del./2019 4 • Copy of section 10(10D) (21) Two, Without prejudice, even in case it is to be held as taxable, only the differential amount of receipt and payment should be subjected to tax, the details of which are as under:- Receipt Rs.58, 78,125/- Less: Paid Rs.25,05.204/- Rs.33,72.921/- Under no circumstances, the self payment which stands included in the receipt amount is of income nature. Therefore cannot be taxed attached:- • Details of payments (11) Three, Without prejudice, First five payments have been made by suruchi foods (P) ltd. The deduction has been claimed only for this five payments totalling Rs.12,56,619/-. The balance five payments totalling Rs. 12,48,585/- have been paid by assessee. No deduction under chapter VI- A have been claimed for these payments, moreso, since, the already other available eligible investment u/s 80C were more than the payment of premium for this policy. Hence under no circumstances, to the extent of Rs.12,48,585/- for which no deduction have been claimed, it cannot be taxed since it is a case of refund of self deposit amount to LIC to this extent. Attached:- • Details of payment (11) In view of above it is submitted that the addition be please deleted.” 5. Considering the same, ld. CIT (A) held as under :- “iv. I have carefully considered both the above issues. In this case, out of total 10 premiums, the proposer company paid 05 installments and the appellant paid 05 installments. The policy stood assigned in his favour after which the premium has been paid by him personally. Hence the point of time from when the appellant starts making the payment himself, the company being the proposer did not avail any deduction out of income for ITA No.9308/Del./2019 5 such payments made by assessee. The appellant has submitted that he did not claim any deduction u/s.80C for the payments made by him towards premium for the years for which he himself made the payment. This is immaterial at this stage. In any case, the AO shall verify the same from the return of the appellant. The stage when the employer starts making the payment, no benefit of deduction is stated to have been availed by the company. The payment receipts being evidence of premium payment were apparently received by him since the policy stood assigned to the appellant for the remaining period of validity of the policy. On considering the facts as submitted, I am of the view that the payments made by the appellant for the policy from his personal sources do not form part and parcel of the keyman policy taken by the employer. The same ratio should form basis of determination of the taxable maturity proceeds. The same has been detailed in the table above. Accordingly, it is held that out of the total maturity receipt. of Rs.58,78,125/- the premium paid by the appellant amounting to Rs 12,48,585 shall be excluded and balance of Rs 46,29,540/- attributable to the employer contribution on keyman policy shall be subjected to tax. The appellant gets part relief.” 6. Against this order, assessee is in appeal before us. We have heard both the parties and perused the record. 7. Ld. Counsel of the assessee submitted that CPC has been wrong in making the addition in processing u/s 143(1) of the Act. Ld. Counsel of the assessee further submitted that in identical circumstances in the case of brother of the assessee i.e. Ganesh Chand Gupta, ITAT in ITA No.9324/Del/2019 vide order dated 03.08.2022 has directed for the deletion of the addition. 8. Per contra ld. DR for the Revenue did not dispute the proposition that in the identical circumstances, ITAT deleted the addition. 9. Upon carefully consideration, we note that ITAT in the aforesaid order has deleted the addition by holding as under :- “7. When the processing by CPC needs improvement by ld. CIT (A) by referring to sub-section of the main section, by no stretch of imagination, it can be said that it was prima facie adjustment and that there ITA No.9308/Del./2019 6 could not have been any debate on the issue raised and adjustment done. The CPC processing is a bland one and without assigning any reason leave alone legal reasoning. 8. Hence, in our considered opinion, the adjustment could not have been done by CPC processing u/s 143(1). Therefore, we set aside the order of authorities below and decide the issue in favour of the assessee. 9. In the result, assessee’s appeal stands allowed.” 10. We find that the aforesaid order is fully applicable in the facts and circumstances of the case as they are identical. It is also not the case that Hon’ble jurisdictional High Court has reversed the order of ITAT. Accordingly, respectfully following the aforesaid decision, we hold that the adjustment could not have been done under CPC proceedings u/s 143(1). Therefore, following the aforesaid precedent, we set aside the orders of the authorities below and decide the issue in favour of the assessee. 11. In the result, the appeal of the assessee stands allowed. Order pronounced in the open court on this 13 th day of October, 2022. Sd/- sd/- (NARENDER KUMAR CHOUDHRY) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 13 th day of October, 2022 TS ITA No.9308/Del./2019 7 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-XXVI, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.